Percepts of Prosperity?

The following is a very interesting piece from Rob Kirby at FSO.

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Precepts of Prosperity

For those of you who are ‘caught up’ or bought into the notion that the status quo either is or has been great for all of us, please consider the following sage words from Mr. Nelson Hultberg’s wonderful treatise, Contrarians and The Keynesian Myth,

“As recorded in The Statistical History of the United States, real wages for the workingman tripled in the years 1850-1913, and the GDP increased over 500% averaging 4.3% annual growth from 1870-1913. This was all done without any inflationary infusions of fiat money from the Fed because there was no Fed. This highly productive era, based upon the "barbarous relic" of gold, was accompanied by an actual deflation of prices. From 1800 to 1913, there was an overall 30% reduction in the Consumer Price Index from 43 to 30. 6 That's right, we had 4.3% annual growth amidst gently deflating prices all without government fiat money, all without FOMC pooh-bahs, all without today's Gargantua on the Potomac.”

It is not until we view economic growth, productivity and prosperity in this light that one might ‘make the connection’ and realize why economic growth has come to embody what we nowadays accept as such.

One needs to consider that the very nature of all fiat money systems implies that ALL MONEY is, in fact, loaned into existence. This fact [that all fiat loans are repaid principal PLUS interest] dictates that the money supply must FOREVER expand to simply service the existing debt. An ever expanding money supply juxtaposed against the constraints of the earth’s FINITE resources is fundamentally foolish and unsustainable with a completely predictable outcome.

In this light, money growth as we know it is more akin to CANCER – a type of growth that touches so many of our lives – which generally harms [or kills] the host,

Cancer is a class of diseases characterized by uncontrolled cell division [growth] and the ability of
these cells to invade other tissues, either by direct growth into adjacent tissue (invasion) or by migration of cells to distant sites (metastasis). This unregulated growth is caused by a series of acquired or inherited mutations to DNA within cells, damaging genetic information that define the cell functions and removing normal control of cell division. ...

In case any of you are wondering, here’s a graphical depiction of what Central Bankers – cheered on by BIG GOVERNMENT – have done to our money supply:

Fed Res. Chart compliments of Jesse: http://www.geocities.com/arthurcutten/jesse.html

By observing the chart above, is it not obvious to everyone how closely correlated money supply growth is with virtually everything? Since 1996:

• Has the stock market not doubled or tripled?
  

• Have housing prices not done the same?
  

• What about the price of crude oil?
  

• How about commodities prices?
  

• How about the value or purchasing power of the dollar?
  

• Deficits?

Do the words of the Fed, namely,

“….the relationship between growth in the money supply and the performance of the U.S. economy has become much weaker,….”

seem credible to ANYONE?

In the end, perhaps the real question is whether or not we will opt for something resembling the discipline of the gold standard, how long we’ll all be prisoners in our own homes or maybe even how many of us will be lucky enough to be cancer survivors.